390 w/open chamber heads

Not to sound like a big dummy but aren't there any datum point on the block?? And also I thought the flycuttter was set parallel to the fixture that holds the crank (crank Center Line) or were talking about being out of square radially along a circle concentric with the crank center line??

treblig

Crank thrust and cam thrust face are the two reference points, but unless you have a 4 axis mill setup for blocks, you have limitations. You can reference bores from head dowels, but tolerance stack is the problem.
Most people that deck blocks float the block thru the mains on an adjustable bar, and level the block in X and Y with a machine level, and cut, parallel to the mains or not. That's part of the reason you hear this nonsense to mock up one rod and piston in each corner and compare before decking. Use the proper fixture and its done right without guessing.
Yes, you would think the cutter is set parallel to the fixture, but most automotive machinist don't have the training/understanding you do. That's why I recommended you have a good conversation beforehand.
If they don't use an indicator to check from the cutter to the block, or hone the block with a torque plate, find another shop.